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Alliance News


TOP NEWS SUMMARY: Burberry Falls On Weak Sales In Key Asia Market

Thu, 16th May 2019 12:22


LONDON (Alliance News) - The following is a summary of top news stories Thursday.
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COMPANIES
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Burberry Group's shares fell despite reporting a rise in annual profit, as investors reacted to weak sales growth in Asia, the luxury retailer's biggest market. In the financial year ended March 30, Burberry's comparable retail store sales rose 2%, meeting analysts' forecasts but slowing from the 3% posted for 2018. In Asia, accounting for 41% of sales, revenue rose 2% to GBP1.10 billion with Europe Middle East & Africa also up 2%, to GBP958 million. The Americas region saw flat revenue at GBP612 million. The retailer, known for its checked print and trench coats, posted pretax profit of GBP440.6 million, up 6.8% from GBP412.6 million the year before. Revenue met analysts expectations, coming in broadly flat at GBP2.72 billion from GBP2.73 billion, however adjusted operating profit lagged behind market consensus at GBP438 million, down 6% year-on-year from GBP467 million. Analysts had seen this registering at GBP442 million. Burberry raised its annual dividend 2.9% to 42.5 pence per share from 41.3p. In financial 2020, Burberry expects to launch a GBP150 million share buyback.
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National Grid reported a significant reduction in annual profit but expressed confidence in its future performance. For the financial year ended March 31, the gas and electricity utility posted pretax profit down 31% to GBP1.84 billion from GBP2.66 billion. Revenue slipped 2.1% to GBP14.93 billion from GBP15.25 billion, while operating costs rose 2.6% to GBP12.06 billion from GBP11.75 billion. The reduction to profitability was also in part due to GBP648 million taken in respect of exceptional items and remeasurements. Notwithstanding the weaker performance, National Grid proposed a total dividend of 47.34 pence per share, up 3.1% on the prior year's 45.93p. This was after recommending a 31.26p final payout. The company said it expects its annual investment programme to increase in financial 2020 to almost GBP5.00 billion.
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3i Group reported a sharp rise in annual net asset value, exceeding expectations, with a strong performance from both its private equity and infrastructure portfolios. Chief Executive Simon Borrows said the company's performance in the twelve months to March 31 "highlighted its resilience" amid a "backdrop of geo-political uncertainty and market volatility". At March 31, 3i's NAV per share stood at 815 pence compared to 724p the year prior, a 13% jump. According to company-compiled consensus - based on six analysts - net asset value per share was forecast to reach to 808p. The company's net assets increased 13% in the period to GBP7.91 billion from GBP7.02 billion the year before. In financial 2019, 3i's total return was GBP1.25 billion, behind the GBP1.43 billion total return the year before, with GBP1.24 billion coming from realisation proceeds. The investment company's portfolio value ended the year at GBP7.55 billion, 13% higher than the GBP6.66 billion value at the end of financial 2018.
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Lloyds Banking Group said that starting from 2020, it will be moving to quarterly dividend payments. The first quarterly dividend payment, for the first three months of 2020, will be paid in June 2020. The revised policy will see three equal interim dividend payments for the first three quarters followed by a larger final dividend in the fourth quarter, subject to performance. The first three quarterly payments will be 20% of the previous year's total dividend. The fourth dividend payment will be announced with the lender's full year results. Lloyds said the amount will reflect its financial performance and "objective of progressing a sustainable ordinary dividend". The bank said the new method will provide a "more regular flow" of dividend income for shareholders.
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Sophos Group revealed a swing to annual profit on the back of strong revenue growth, foreign exchange gains and lower costs. For the financial year ended in March, Sophos recorded pretax profit of USD53.6 million, compared with a USD41.0 million loss in financial 2018, on revenue of GBP710.6 million and USD639.0 million, respectively. The rise in revenue was attributed to 16% year-on-year growth in subscription revenue to USD593.9 million from USD512.4 million. Adjusted operating profit - the company's preferred profit measure - increased 87% to USD109 million from USD58 million, driven by revenue growth and operating leverage, as well as a one-off benefit from the reduction in variable performance-related pay in the period.
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Just Group said its retirement income sales in the first quarter fell sharply amid a "new regulatory regime" as it shuts its loss-making US operations. Just Group's retirement income sales in the three months to March 31 decreased 59% to GBP184 million from GBP454 million the year before. Defined Benefit De-Risking sales were almost wiped out, decreasing to GBP26 million from GBP249 million. Guaranteed Income for Life sales decreased 23% to GBP145 million from GBP188 million. Lifetime mortgage loans advanced in the quarter decreased 47% to GBP79 million from GBP151 million. As a result of the sharp drop in retirement income and lifetime mortgages, Just Group's total business sales in the period decreased 55% to GBP276 million from GBP617 million. The retirement insurer said its capital position has been "much improved" following its GBP375 million equity raise in March. Just Group said it is "absolutely focussed" on achieving capital neutrality by 2022.
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MARKETS
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London shares were mixed as the hostility between the US and China over trade intensified. Burberry was the worst blue chip performer, down 4.7%. The pound was lower against the dollar as UK Prime Minister Theresa May gets set for her showdown meeting with senior Conservative Party MPs. Wall Street was pointed to a lower open with retailer Walmart set to report earnings before the market open in New York.
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FTSE 100: down 0.1% at 7,286.75
FTSE 250: up 0.3% at 19,422.20
AIM ALL-SHARE: flat at 957.97

GBP: down at USD1.2835 (USD1.2866)
EUR: flat at USD1.1211 (USD1.1212)

GOLD: down at USD1,295.44 per ounce (USD1,296.40)
OIL (Brent): up at USD72.14 a barrel (USD71.64)

(changes since previous London equities close)
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ECONOMICS AND GENERAL
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China has said it will protect its companies from "unfair" treatment from the US following Washington's blacklisting of Chinese tech giant Huawei, and has reassured foreign companies operating in China. China urged the US to end its "wrong approach", Foreign Ministry spokesman Lu Kang said Thursday, hours after US President Donald Trump declared a national emergency aimed at protecting US communications networks, in a move regarded as part of an effort to keep Huawei out of the US market. "If Chinese enterprises are treated unfairly, the Chinese side certainly has the power to take necessary measures to safeguard our legal and reasonable rights," Lu said. He reassured foreign companies that as long as they operate legally in China, "they do not have to feel any unnecessary concerns". Trump's move is consistent with his commitment to protect the information and communications technology and services of the US, a White House statement said.
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UK Prime Minister Theresa May is facing a showdown meeting with senior Tories demanding she sets a firm resignation date. May is holding talks with members of the executive of the 1922 Committee of backbench Conservative MPs on Thursday as the clamour for her to make clear when she will exit Number 10 grows. Committee treasurer Geoffrey Clifton-Brown told the Press Association: "It would be infinitely preferable if she set a date rather than us force her out. "It's better that she does it than we have a vote of confidence. What I would like to see is her set out a timetable to trigger a leadership contest." After the talks with the prime minister, the 1922 Committee executive will hold a private meeting where changes to Tory leadership contest rules could be discussed, according to sources. At present, May cannot be challenged again as leader until December.
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Copyright 2019 Alliance News Limited. All Rights Reserved.

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